Subchapter H. POINT-OF-SERVICE PRODUCTS GROUP
SPECIFIC COMMUNITY RATING
STATEMENT OF POLICY
301.202. Financial requirementspoint-of-service products.
301.203. Filing requirements.
301.204. Group specific community rating for HMOs.
§ 301.201. General.
An HMO point-of-service product filing or a group specific community rating filing complying with standards in this chapter is acceptable.
The provisions of this § 301.201 adopted September 27, 1991, effective September 28, 1991, 21 Pa.B. 4424.
§ 301.202. Financial requirementspoint-of-service products.
(a) Minimum net worth compliance.
(1) HMOs offering point-of-service products will be assuming additional indemnity-type financial risk. To adequately protect HMO members enrolled in point-of-service products and to ensure HMO ability to pay indemnity claims for covered services rendered by out-of-network providers, each HMO desiring to offer a point-of-service product shall first present satisfactory evidence of having a minimum net worth of the highest of $1.5 million of 2% of premiums, or an amount equal to the sum of 3 months uncovered health care expenditures as reported on the most recent financial statement filed with the Insurance Department. The evidence shall be presented to the Insurance Departments Bureau of Licensing and Financial Analysis, Office of the Regulation of Companies.
(2) Upon satisfactory compliance with this requirement, an HMO may then make an appropriate program filing with the Departments Office of Rate and Policy Regulation, Division of HMOs/PPOs and to the Bureau of Health Financing and Program Development of the Health Department.
(b) Adequate reserving requirements.
(1) An important component of financial integrity of a point-of-service product is the ability of an HMO to monitor adequately incurred but not reported claims (IBNR) and adequately reserve for the liabilities.
(2) An HMO receiving approval to offer a point-of-service product shall establish and maintain specified reserves for uncovered expendituresthat is, expenditures owed to nonparticipating providers not having contracts with the HMO which includes NAIC/NAHMOR financial hold harmless languagegreater than the most recent 3 months of out-of-network (swing out) claims paid.
(3) Each HMO gaining approval to offer a point-of-service product shall submit to the Departments Bureau of Licensing and Financial Analysis on a quarterly basis evidence that it has met this requirement and established sufficient reserves.
(4) The Department and the Department of Health (the Departments) may suspend the HMOs authority to enroll additional members in point-of-service products if it fails to maintain the minimum net worth requirements as set forth in subsections (a) and this subsection. Failure of the HMO to correct a reserve deficiency promptly may result in withdrawal of its authority to offer a point-of-service product.
(c) Limits on out-of-network usage/expenses.
(1) It is the Departments interpretation of the act that, while HMOs may be permitted to offer point-of-service products, the primary business of an HMO should remain the provision and financing of basic health services through the HMOs organized health services delivery system centered around each members voluntarily selected primary care physician (PCP).
(2) Therefore, the Departments are establishing a 10% target limit for out-of-plan usage.
(3) The 10% target limit shall be calculated as follows for each reporting period:
Total point-of-service out of network claims incurred by the HMO for the reporting period.
Total of all claims incurred by the HMO for the reporting period.
The target percentage
(i) The target percentage shall be calculated and reported to the Departments on a quarterly basis.
(ii) If the target percentage exceeds 10%. The HMO shall include with its submission of the target percentage calculation:
(A) An explanation of why and how out-of-plan utilization has exceeded 10%.
(B) What steps will be taken during the following reporting period to bring out-of-plan utilization to within the target percentage.
(iii) The Departments may suspend the HMO from enrolling additional members in the point-of-service product if the target percentage exceeds 10% for more than 3 consecutive quarters.
(iv) The Departments will compare reported estimated expenditures with actual expenditures. Variations between estimated and actual expenditures may result in suspension of the HMOs authority to offer a point-of-service product.
The provisions of this § 301.202 adopted September 27, 1991, effective September 28, 1991, 21 Pa.B. 4424.
This section cited in 31 Pa. Code § 301.203 (relating to filing requirements).
§ 301.203. Filing requirements.
(a) Along with the submission of adequate reserving methodology, an HMO shall submit a formal product filing to the Division of HMOs/PPOs of the Department and the Bureau of Health Financing and Program Development of the Department of Health.
(b) HMOs will be permitted to offer a point-of-service product subject to the following conditions.
(1) Filing requirementsall products:
(i) Two copies shall be submitted to each Department.
(ii) The filing shall include an appropriate rate filing.
(iii) The filing should contain incentives for HMO members to utilize basic HMO services, stay within the HMO panel of participating providers, and utilize the services of designated primary care physicians. Minimum requirements for indemnity reimbursement for out-of-network claims should be:
(A) Minimum deductible of $250 per individual/$500 per family per calendar year.
(B) Minimum coinsurance of 20%.
(C) Total out-of-pocket expenses for use of nonnetwork providers should be in the following ranges:
(I) Individual annual out-of-pocket expense, excluding calendar year deductible: minimum$2,000; maximum$5,000.
(II) Family annual out-of-pocket expense, excluding calendar year deductible: minimum$4,000; maximum$10,000.
(III) The lifetime maximum for point-of-service out-of-network claims per person shall be at least $250,000.
(iv) Clear and adequate disclosure is an absolute necessity because of the complexity of the point-of-service product and great potential for enrollees to misunderstand it. The evidence of coverage shall contain adequate disclosure of coverage limitations and conditions, including member liability for deductibles, copayments and differences between the HMOs UCR reimbursement and actual charges of out-of-network providers.
(v) Primary care services shall only be reimbursable within the HMO network when rendered at or by direction of the members primary care physician. Primary care services shall be services which the primary care physician is requested to provide under the provisions of the contract with the HMO.
(vi) An HMO may require precertification of out-of-network nonemergency hospital admissions.
(vii) Emergency coverage shall be provided under provisions of the basic HMO coverage without application of out-of-network deductibles or coinsurance.
(viii) The filing shall include an explanation of how the HMO will meet its continuity of care requirements under the act and 28 Pa. Code (relating to health and safety).
(ix) The HMO shall require that either the members PCP or the HMO itself issue a claim form or other notice for use by the member in claiming reimbursement for out-of-network care. The claim form or other notice shall be submitted for review and approval of the Departments and the Department of Health. The claim form or notice shall require the signature of the member and contain adequate disclosure that the member understands that by voluntarily seeking care out-of-network the member is assuming substantial financial liability for the care, and that the care if provided within the HMO network would be provided at a much lower out-of-pocket expense to the member.
(x) The HMO is responsible for furnishing claims information to the primary care physician concerning the members usage of out-of-network health services. The objective of this requirement is to provide critical information to the patients primary care physician so that when the member returns in-network, the PCP has adequate knowledge to maintain continuity of care.
(xi) Other methods to accomplish the objective in subparagraph (x) may be proposed in the filing and will be reviewed on a case by case basis.
(xii) An information system shall be included by which the HMO will track the claims payments by PCP for out-of-network services. The HMO shall commit itself to monitoring out-of-network usage and to promptly investigate any PCP practice whose enrolled members are utilizing substantially higher levels of out-of-network care than average. Therefore, written policies and procedures shall be included in the filing to ensure that PCPs are not subtlety or otherwise encouraging members to use out-of-network providers.
(xiii) The filing shall describe in detail the HMOs claims payment system. This description shall include staffing for paying out-of-network indemnity claims and capability for establishing adequate tracking, estimation and reserving for incurred but not reported claims.
(xiv) The HMOs data/information system shall be capable of paying out-of-network claims in a timely manner, tracking incurred but not reported expenses, adequately forecasting projections, calculating the 10% limit, adequately interfacing between membership and eligibility files and between the HMOs systems and those of an applicable affiliated insurer, and generating required Department reports.
(xv) Nongroup conversions are not required to include a point-of-service benefit.
(xvi) Approvals for point-of-service products will be subject to a 1-year probationary period during which time the HMO will have to establish a track record of successfully administering a point-of-service product. During the 1-year probationary period, enrollment in the point-of-service may not exceed 5% of the HMOs private sector enrollment.
(b) Additional filing requirements for products in which the out-of-network indemnity benefits are to be underwritten by an HMO affiliated insurer, which is any carrier other than the HMO itself proposing to supplement the HMOs standard coverage by providing out-of-network benefits are:
(1) The filing shall be made by the HMO.
(2) The filing shall include:
(i) Copies of the previously approved group contract and certificate.
(ii) Copies of amendments necessary or desirable thereto to integrate the services to be provided by the HMO and paid for by the affiliate insurer.
(iii) Copies of the affiliated insurers group master contract and certificate.
(iv) Enrollment material and enrollee literature.
(v) The certificates and enrollee literature that adequately explain how the program will operate.
(vi) A copy of the contract between the HMO and affiliated insurer detailing their respective responsibilities and obligations in offering a point-of-service product.
(3) The HMO shall include in its rate filing the rate level justification and a demonstration of how the out-of-network indemnity benefits to be provided by the affiliated insurer will impact on the HMOs rates and underlying utilization assumptions.
(4) To lessen confusion on the part of members, out-of-network claims shall be initially filed with the HMO. Additionally, the member point of contact regarding out-of-network benefits shall always be with the HMO.
(5) Grievances, including those concerning coverage or claim denial under the out-of-network benefit program, shall be subject to and decided by the HMOs approved grievance system and procedures.
(6) The affiliated insurer and joint product shall comply with this subchapter except for the financial reserving requirements of § 301.202(b) (relating to financial requirementspoint-of-service products).
(7) The HMO is responsible for utilization management activities, not the affiliated insurer.
The provisions of this § 301.203 adopted September 27, 1991, effective September 28, 1991, 21 Pa.B. 4424.
§ 301.204. Group specific community rating for HMOs.
(a) HMOs will be permitted by the Department to use group specific community rating subject to the methodology in the proposed regulations published by the Health Care Financing Administration in Federal Register, Vol. 56, Number 133 at page 31597, July 11, 1991 (to be codified at 42 CFR 417.104(b)(2)(ii)) or in a final adopted regulation if there is a change in this section.
(b) In addition to the Federal standards, an HMO shall also meet the following conditions to use group specific community rating in this Commonwealth:
(1) The HMO shall demonstrate that it has the capability to capture claims data on a group specific basis.
(2) Group specific community rating will only be applicable to groups that have an enrollment in the HMO of at least 250 employes for the most current 12-month period. An HMO may set the minimum size requirement at a higher level than 250 enrolled employes. The minimum size requirement applies to each HMO product sold to the group.
(3) Once an HMO elects to use group specific community rating, it shall use the method for all groups that meet the minimum size requirement established by that HMO and approved by the Department.
(4) The HMO shall have covered the group for at least 36 consecutive months.
The provisions of this § 301.203 adopted September 27, 1991, effective September 28, 1991, 21 Pa.B. 4424.
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